Products fail, leading companies falter, and sales slump when businesses don't have an accurate view of 'the customer.' Does this just happen to poorly managed organizations, or could it happen anywhere? Zombies, Phantoms and Shadows are three very real threats to your customer experience initiatives. We’ll show you where these threats come from and — most importantly — provide tips to help you combat them in your organization.

1. ZOMBIES/
PHANTOMS/
SHADOWS
3 THREATS TO YOUR CUSTOMER
EXPERIENCE INITIATIVES
@gdrummond @quarry
GLEN DRUMMOND
CHIEF INNOVATION OFFICER
MARKETINGPROFS 2013 B2B AGENCY OF THE YEAR

2. YOUR CUSTOMER
EXPERIENCE
INITIATIVE
IS IN DANGERIf the quality of your customer experience and the success
of your CX initiatives hinge on the quality of your customer insight,
then it's critical to ask yourself: How often do we go back and take a
fundamental look at the way we've thought about that customer
insight and the quality that has gone
into the process of defining it?

3. WE ALL
KNOW
CUSTOM
ER
EXPERIE
NCE
MATTER
S
Many companies have embraced
the importance of delivering a
better customer experience. In
maturing and well-established
markets, company success
requires
a new way of thinking that
recognizes that great experiences
distinguish great products (and
services) and, ultimately, create
highly desirable brands.

4. SO
WE‟RE
ALL
TRYING
TO
UNDERST
AND
CUSTOM
ERS
But, amidst the hectic pace of attending meetings,
building metrics, analyzing data and implementing
programs, when someone says “the customer,” what
is it he or she actually means? How often do we take
the time to ask: “How is it that we „know‟ what we
believe we know about our customers?”
As customer experience professionals, we go to
notable lengths to get “inside the head” of customers,
but we pay dangerously little attention to how our
own minds make sense
of that knowledge.

5. AND SO,
WHAT
COULD
POSSIBLY
GO WRONG?

6. “THEORY
OF
THE
BUSINES
S”
Peter Drucker‟s 1994 Harvard
Business Review essay diagnoses
what
can go wrong: the “theory of the
business” becomes detached from
reality. Cognitive science provides
insights on why that happens.

7. To illustrate what can go wrong,
let‟s do a thought experiment.
• Take your mind back to the dark ages of Europe, and
form a mental picture of a Viking.
Do you have that image?
• Now, holding that image in your mind, consider the
question on the next slide.

8. WOULD YOU ENTRUST
THESE KITTENS
TO THE CARE OF YOUR
VIKING?
We‟re guessing you gave an emphatic “No!” But, why is that?

9. “THE
PROTOT
YPE
EFFECT
”
As we think about a category, we experience
some examples as more central, salient and
“exemplary” than others.

10. In the case of the thought experiment,
the Viking you likely imagined—a rugged adult
male with an apparent proclivity for violence— is
a “prototype” of the category Viking. You could
have pictured an elderly woman, a pre-teen or a
young mother. Instead of a warrior, you might
have pictured a dairy farmer, fisherman, weaver
or merchant. Each of those would likely
be more than suitable for taking care of our
kittens.
Yet, you probably didn‟t.

11. “THE
PROTOTYPE
EFFECT”
AFFECTS OUR
SENSE
OF
PROBABILITY.
IT EXERTS A COGNITIVE
PRESSURE THAT SHAPES
THINKING BEFORE WE KNOW IT
IS BEING SHAPED.
And, in the case of our theory of the business,
it shapes our thinking about “customers”.
Why does that matter?

12. Looking at the infamous case of
General Motors (GM) and its fall from
global market dominance
in the 70‟s, Peter Drucker argues that
GM‟s longstanding consumer
segmentation model—based on
income—was the culprit. Income was
no longer the most strategically
relevant way to categorize customers.
Drucker proposes that psychographics
and lifestyle patterns were the
way GM might have anticipated the
introduction of the minivan
and the compact car—but didn‟t.

13. “REALITY HAS
CHANGED,
BUT THE
THEORY OF
THE
BUSINESS
HAS NOT
CHANGED
WITH IT.”
PETER DRUCKER
THE THEORY OF THE
BUSINESS, HBR
Through the lens of cognitive science, GM‟s
“prototype” customers were not targets for minivans
or compact cars when, in fact, real customers
responded to these innovations
in a significant way.

14. WHAT SHOULD WE CALL A MENTAL MODEL OF THE CUSTOMER
THAT NEITHER CONVEYS NOR ELICITS STRATEGIC CUSTOMER
INSIGHT AND YET IS STILL INFLUENCING DECISION-MAKING
IN YOUR ORGANIZATION?
WE CALL THAT A ZOMBIE SEGMENT.

15. THREAT #1
ZOMBIE
SEGMENT• Cognitive prototypes for
“Customers”
• Strategically brain dead
• Still shuffling around
When your mental model of the customer is
structured by dimensions that are no longer
the ones that are most strategically relevant, you
have something that is brain dead,
but still walking around your office halls.
You have zombie segments.

16. WHERE DO
WE
INSTINCTIVEL
Y RUN?When we‟re faced with the challenge of a segmentation model that has slipped
out of touch with reality, where do we go? There is a predictable pattern that emerges that
we‟ve seen over decades of business experiences.

17. THE TIDY
REASSU
RANCE
OF
NUMBER
S
Based on the uncertainty
of making sense of our
world, we look to numerical
information, which presents itself
as “objective fact.”
But, does having numbers mean
that we escape the “theory of the
business” problem?

18. Let‟s try another thought experiment.
Do you see a white triangle?
If you see a white triangle, that makes you
human. The problem is, the white triangle is
not really there. It only appears to be.
Why does this happen?

19. “THE
REIFICA
TION
EFFECT
”
As we organize experiences into structured wholes,
we perceive the whole as more “basic” and “real”
than the parts.

20. It‟s easy to demonstrate that the white triangle we
see is not there. It‟s harder—except through business
failure—to demonstrate that customers we see are
not there.
IT MAKES US CONFUSE
ABSTRACTIONS FOR “REALITY.”
“THE
REIFICATION
EFFECT”
AFFECTS OUR
SENSE
OF REALITY.

21. “THE ODDS OF
DEVELOPING
SUCCESSFUL NEW
PRODUCTS
BEGIN TO TUMBLE WHEN
MANAGERS
COLLECTIVELY BEGIN TO
ASSUME
THAT THE
CUSTOMER’S
WORLD IS
STRUCTURED
IN THE SAME
WAY
THAT THE DATA
ARE
CLAY CHRISTENSEN
THE INNOVATOR’S
DILEMMA

22. WHAT SHOULD WE CALL A MENTAL MODEL OF THE CUSTOMER
THAT WE‟RE AT RISK OF PRODUCING WHEN
WE MERELY LOOK AT THE DATA WE‟VE GOT AND INFER
THE ROOT CAUSE OF CUSTOMER BEHAVIOR?
WE CALL THAT A PHANTOM SEGMENT.

23. THRE
AT #2
PHAN
TOM
SEGM
ENT
• Market segments defined along the lines
for which data happen to be available
• A numerical commonality mistaken for
a real strategic insight
• You see them, but they are not really
there
When coincidence is confused with causality—
when a pattern perceived is mistaken for an
external reality—you have phantom segments.

24. “AGREEMENT”
AND “ACQUIESCENCE”
ARE EASILY CONFUSED.
Phantoms are a particular problem in segmentation
models based on “loyalty.”
Think about your own experiences; have you ever
been thanked on the phone for being
a loyal customer and thought to yourself:
“No, really, I‟m not loyal at all. I just look that way to
your computer.”? In those cases,
those companies have a reified image of
you as a “loyal” customer.

25. WHAT ELSE
AREN‟T WE
SEEING?When our models of “the Customer” are formalized in customer segmentation models,
it is wise for us to ask: “Are we missing anyone that might be strategically relevant?”

26. “INATTEN
TIONAL
BLINDNE
SS”
The failure to see something obvious
while focusing on something else.

27. If we can miss a moonwalking bear that‟s
right in front of our eyes, what
are the odds we are certain to spot emerging
customer needs and trends?

28. IT MAKES US NEGLECT PEOPLE WHO HOLD CLUES
ABOUT TRENDS THAT SHAPE OUR FORTUNES, FOR
BETTER OR WORSE.
“INATTENTIONAL
BLINDNESS” AFFECTS
THE SCOPE OF OUR
CURIOSITY.

29. The way we categorize customers plays
a big role here; it can lead us to fall prey
to inattentional blindness.
For example, if we categorize customers
according to a demographic dimension such as
income, it‟s possible, even likely, that no
representative member of the set
will point us towards the group of people united
by a strategically relevant attitude or problem
they are trying to solve.

30. USUALLY THEY SHOW
UP FIRST AMONG ONE‟S
NON-CUSTOMERS.”
“THE FIRST SIGNS OF
FUNDAMENTAL CHANGE RARELY
APPEAR AMONG ONE‟S CUSTOMERS.
PETER DRUCKER
THE THEORY OF
THE BUSINESS,
HBR
“Customer” segmentation can be accidentally
prophetic. We design for people we see in the
model. As a result, people we can‟t see
in the model have fewer reasons to become our
customers.

31. WHAT SHOULD WE CALL A
POTENTIALLY VIABLE
SEGMENT THAT HAS A STRATEGICALLY
ACTIONABLE COMMONALITY, BUT IS
OBSCURED BY OUR CURRENT VIEW
OF “THE CUSTOMER”?
WE CALL THAT A SHADOW SEGMENT.

32. THREAT #3
SHADOW
SEGMENT• Real people, with a strategically actionable
commonality
• Obscured by the existing segmentation perspective
• Hiding in plain sight
• A haven for disruptors
When your system of categorizing people obscures a strategically relevant commonality in
your marketplace,
you have shadow segments—and a likely haven for
competitors and disruptive threats.

33. PRECISELY
BECAUSE THESE
FIRMS LISTENED
TO THEIR
CUSTOMERS...
THEY LOST THEIR
POSITIONS OF
LEADERSHIP.”
“GOOD MANAGEMENT
WAS THE MOST
POWERFUL REASON
THEY FAILED
TO STAY ATOP THEIR
INDUSTRIES.
CLAY
CHRISTENSEN
THE INNOVATOR’S
DILEMMA

34. AVOIDING
THE
APOCALYPSEThe situation may look dark, but it‟s not hopeless...

35. TIP #1:
SHIFT SETTINGS FROM
AUTOMATIC TO MANUAL
If the problems in the theory of the business—those we‟ve personified here as zombies, phantoms and
shadows—originate in the mind, then the answer is to become deliberate and methodical about how we
form our perspective. Mistrust automatic point and shoot “common sense.” Slow down and put thinking
about customers on “manual” settings.

36. TIP #2:
FOLLOW A PURPOSE-
BUILT PROCESS
• Frame the research problem carefully
• Meet members of the study population
in their environment
• Study the problem-space, not the market-space
• Look for “tensions in motivation”
• Don‟t stop when the research is finished
MYSTE
RY
DATA KNOWL
EDGE
INSIGH
T
INNOVA
TION

37. TIP #3:
PERSONIFY
YOUR INSIGHTSAs we work under the nearly constant
cognitive pressure exerted by zombies,
phantoms and shadows, the
personification of strategic
segmentation insight exerts a
countervailing cognitive pressure that
holds these threats at bay. Richly
crafted personas, based on an
understanding of target customers‟
motivations, goals and behaviors,
diminish the power of these threats
over our imagination as we craft
strategies and engagement plans, and
produce creative and tactical
executions.

38. TO WARD OFF THESE
THREATS, DOWNLOAD
THE FULL ARTICLE AT
QUARRY.COM/3THREATS
GLEN DRUMMOND
CHIEF INNOVATION OFFICER, QUARRY
gdrummond@quarry.com @gdrummond @quarry